International Business

Chapter 13: Accounting and Financing Practices

Chapter Summaries

• The ability to evaluate standard accounting documents is vital to being able to manage a company. The basic documents include an income statement and a balance sheet.
• When a company conducts operations in more than one country, currency exchange rates and other related factors must be considered.
• Accounting standards determine how information must be presented, and they vary from country to country.
• Four components called the four Cs comprise the negotiation process: common interests, conflicting interests, criteria, and compromise.
• When a company needs money to finance new activities, there are three primary sources: private investors, banks, and the government.
• The two basic types of stock sold in the United States are common stock and preferred stock. Common stock is a unit of ownership of a company that entitles the owner, or stockholder, to voting privileges. Preferred stock is a type of stock that gives the stockholder the advantage of receiving cash dividends before common stockholders receive cash dividends; common stockholders do not vote.
• Bank loans, the issuance of bonds, and the acquiring of government-backed capitalization are also sources of capital.